Capital expenditure

Didn't find your answer?

A company has decided not to capitalise some computer equipment e.g. IPads and screens etc as they are not considered material per it's depreciation policy.

Preparing the year end tax comp and have noticed the company has already superseeded the AIA allowance through expenditure that was capitalised in the accounts. 

Is it mandatory to disallow the additional capital items that have been expensed in the p&l and add them to the Main pool to be written down over a number of years as this will obviously not be as beneficial as the relief provided through p&l?

Replies (5)

Please login or register to join the discussion.

By Ruddles
26th Jul 2017 21:19

Depends on what you mean by "some" and, to a degree, how often the items are replaced.

As we know, there is no materiality in tax, but whether or not HMRC would insist on an adjustment would depend on the circumstances and the jobsworthiness of the enquiring Officer.

Thanks (1)
Replying to Ruddles:
avatar
By topgear1991
26th Jul 2017 22:58

Thanks,

By some there is circa £15k of alot alot of smaller expenditure which has been brought to cope with expansion. I would guess this will have to be replaced after around 3 years max.

It would seem quite unrealistic for someone like Tesco to add back all of their possible capital in nature expenditure which they have decided to expense?!

Thanks (1)
Replying to topgear1991:
RLI
By lionofludesch
27th Jul 2017 08:33

topgear1991 wrote:

It would seem quite unrealistic for someone like Tesco to add back all of their possible capital in nature expenditure which they have decided to expense?!

Maybe they just capitalise it in the first place. Who knows?

If you're toey about it, you could always stick the assets in Short Life Single Asset pools and write them off in three years time. At least you'd be getting relief in a reasonable time and not letting it drift over 15 or 20 years.

Thanks (1)
Replying to topgear1991:
By mrme89
27th Jul 2017 08:47

It wouldn't be onerous for them if they post the expenditure to 'capital items expensed' or other such nominal code.

Thanks (1)
Replying to Ruddles:
RLI
By lionofludesch
27th Jul 2017 08:35

Ruddles wrote:

As we know, there is no materiality in tax.......

I've actually always found HMRC to be very reasonable about materiality, erring on the taxpayer's side, if anything.

Thanks (1)